A key issue considered by the AAT was whether there had been a loan made from the MWS Fund to a unit trust, the Montgomery Property Trust (MPT), in the 2004 year. The MWS Fund held 100% of the units in the MPT. The AATwas satisfied based on the evidence that there was an unpaid distribution of the profit made on the sale of property from the MPT to the MWS Fund and a loan back of that amount from the MWS Fund to the MPT, in contravention of s 84.

The AAT also decided that, properly characterised, the sole purpose of the MWS Fund was not to provide retirement benefits to its members. One of its purposes was to provide support to the family wool trading business operated by another trust, the Montgomery Wools Family Trust (MFT). The AAT therefore found that Montgomery Wools also breached s 62 of the SIS Act.

However, the AAT expressed the view that there was no breach of s 109(1A) of the SIS Act because the trustee was not required to deal with the investment in the units in the MPT during the events that took place in 2004. This finding was not in accordance with the ATO submissions and the ATO states that it may seek to further clarify the application of s 109(1A) of the SIS Act in an appropriate case in the future.